The ongoing economic struggles faced by many South Korean households due to high interest rates and inflation have led to a surge in credit card debt. (Image courtesy of Yonhap)
SEOUL, Jun. 21 (Korea Bizwire) – The ongoing economic struggles faced by many South Korean households due to high interest rates and inflation have led to a surge in credit card debt, surpassing 40 trillion won last month. Additionally, the use of “balance transfer” loans, which allow borrowers to consolidate debt from one credit card to another, has continued its upward trajectory.
According to data from the Credit Finance Association released on June 20, the combined outstanding credit card debt held by nine major card issuers (Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin, and NH Nonghyup) reached a record high of 40.5 trillion won at the end of May, an increase of 552 billion won from April’s previous record of 39.9 trillion won.
Concurrently, the balance of balance transfer loans, where borrowers unable to repay their credit card debt take out new loans from the same card issuers, has also been rising. As of the end of May, the balance transfer loan balance stood at 1.9 trillion won, an increase from 1.8 trillion won at the end of April. Compared to the same period last year, the figure has surged by nearly 600 billion won.
“With the significant economic hardships faced by many households and a decrease in loans from other lenders like savings banks, it appears inevitable that credit card debt will continue to grow in the near future,” said an industry representative. “The rising balance of balance transfer loans also reflects the challenges vulnerable borrowers face in making timely repayments.”
The outstanding balance of cash advance services provided by credit card companies reached 6.6 trillion won at the end of May, an increase of approximately 1 trillion won from the previous month. However, the revolving balance for deferred payments saw a slight decline, standing at 7.2 trillion won in May, down from 7.3 trillion won in April.
M. H. Lee (mhlee@koreabizwire.com)
